Dollar Rent A Car 2007 Annual Report Download - page 66

Dollar and Thrifty will advertise and promote Chrysler products exclusively, and the Company will
receive promotional payments from Chrysler for each model year. Purchases of revenue-earning
vehicles from Chrysler were $3,426,078,000, $3,714,080,000 and $3,454,082,000 during 2007,
2006 and 2005, respectively.
Vehicle acquisition terms provide for guaranteed residual values in the U.S. or buybacks in Canada
on the majority of vehicles, under specified conditions. Guaranteed residual and buyback payments
provide the Company sufficient proceeds on disposition of revenue-earning vehicles to realize the
carrying value of these vehicles. Payments received are included in proceeds from sales of
revenue-earning vehicles and applied against the related receivables reflected in Due from Chrysler
within Receivables, net on the balance sheet (Note 5). Additionally, the Company receives other
incentives primarily related to the disposal of revenue-earning vehicles, which amounts have been
reflected as offsets to vehicle depreciation expense in the consolidated statements of income.
Promotional payments received under the VSA are recognized as a reduction of the cost of the
vehicles when acquired. The Company also receives interest reimbursement for Program Vehicles
while at auction and for certain delivery related interest costs, which amounts are reflected as offsets
in interest expense, net. The aggregate amount of payments recognized from Chrysler for
guaranteed residual value program payments, promotional payments, interest reimbursement and
other incentives, other than recovery costs, totaled $771,485,000, $784,595,000 and $842,071,000
in 2007, 2006 and 2005, respectively, of which a substantial portion of the payments relate to the
Company’s guaranteed residual value program and are included in Due from Chrysler within
Receivables, net on the consolidated balance sheet. Buyback payments received from the Canadian
subsidiary of Chrysler were $133,144,000, $172,191,000 and $154,029,000 in 2007, 2006 and
2005, respectively, and are included in Due from Chrysler within Receivables, net on the
consolidated balance sheet.
Additionally, the Company acquires both Program and Non-Program Vehicles from other
manufacturers. Rent expense for vehicles leased from other vehicle manufacturers and third parties
under operating leases was $2,886,000, $7,146,000 and $9,556,000 for 2007, 2006 and 2005,
respectively, and is included in vehicle depreciation and lease charges, net. Amounts due over the
next five years for vehicles under operating leases with terms greater than one year total $1,163,000
and are payable as $966,000 in 2008, $197,000 in 2009 and no amounts due in 2010, 2011, or
2012.
7. PROPERTY AND EQUIPMENT
Major classes of property and equipment consist of the following:
2007 2006
Land 12,240$ 13,028$
Buildings and improvements 22,575 20,078
Furniture and equipment 93,905 87,407
Leasehold improvements 129,542 114,899
Construction in progress 13,876 12,620
272,138 248,032
Less accumulated depreciation and amortization (149,835) (131,245)
122,303$ 116,787$
December 31,
(In Thousands)
58